Kjell-Morten Johnsen EVP and Head of Telenor Europe, 29 April 2013

Telenor to acquire Globul in Bulgaria Kjell-Morten Johnsen – EVP and Head of Telenor Europe, 29 April 2013 Disclaimer The following presentation is b...
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Telenor to acquire Globul in Bulgaria Kjell-Morten Johnsen – EVP and Head of Telenor Europe, 29 April 2013

Disclaimer The following presentation is being made only to, and is only directed at, persons to whom such presentation may lawfully be communicated (’relevant persons’). Any person who is not a relevant person should not act or rely on this presentation or any of its contents. Information in the following presentation relating to the price at which relevant investments have been bought or sold in the past or the yield on such investments cannot be relied upon as a guide to the future performance of such investments. This presentation does not constitute an offering of securities or otherwise constitute an invitation or inducement to any person to underwrite, subscribe for or otherwise acquire securities in any company within the Telenor Group. The release, publication or distribution of this presentation in certain jurisdictions may be restricted by law, and therefore persons in such jurisdictions into which this presentation is released, published or distributed should inform themselves about, and observe, such restrictions. This presentation contains statements regarding the future in connection with the Telenor Group’s growth initiatives, profit figures, outlook, strategies and objectives. All statements regarding the future are subject to inherent risks and uncertainties, and many factors can lead to actual profits and developments deviating substantially from what has been expressed or implied in such statements.

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Agenda ● Transaction highlights ● Investment case ● Market and business overview ● Telenor’s plan for Globul ● Summary

Transaction highlights ●

Telenor on 26 April 2013 agreed to acquire Globul and Germanos from OTE 

Globul: #2 mobile operator in Bulgaria



Germanos: Retail network integrated with Globul



Acquisition price EUR 717 million on a debt and cash free basis



Opportunity to leverage Telenor’s operational expertise in the CEE region



Consistent with value-driven and disciplined M&A strategy



Closing of transaction pending regulatory approval

European mobile transactions EV/LFY EBITDA

Orange Austria / Hutchison Feb-12

(1)

7.4x

Polkomtel / Solorz Jun11

6.5x

Orange Switz. / Apax Nov11

6.5x

SFR / Vivendi Apr-11

6.4x

Globul / Telenor Apr-13

5.8x

(2)

Average precedents 6.7x

___________________________ 1. Including potential earn-outs (6.9x pre earn-outs). 2. EV/EBITDA multiple based on broker consensus 2013e EBITDA of EUR 123 million, reflecting recent MTR cuts. The EV/2012 EBITDA multiple is 5.3x. 4

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Investment case

Strong market position  #2 with 36% subscriber market share  Similar scale to #1  Strong profitability with further upside potential

Regional cluster  Leverage track record in the comparable Serbian market  Building on Telenor’s CEE experience

Proven execution  Postpaid and B2B upside  Network swap and upgrade opportunity

Stable macro fundamentals  Low public debt to GDP  Currency pegged to Euro  10% corporate tax rate

Mobile data potential  Low mobile data usage  Low smartphone penetration

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Good fit with existing Telenor operations in the region

Telenor Hungary

Telenor Serbia

Telenor Montenegro

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Bulgaria: Macro context • Low public debt as a % of GDP • EU member with currency pegged to EUR • However, typical challenges associated with a developing European market Regional context for 2012 Bulgaria

Serbia

Public debt as a % of GDP (2012) Hungary

Romania

0%

20%

40%

60%

80%

Population (m)

7.3

7.1

10.0

21.4

GDP per Capita ('000€)

5.4

4.2

9.8

6.2

Real GDP Growth (%)

0.8

(1.7)

(1.7)

0.3

Public Debt (GDP %)

15.4

60.6

79.1

33.3

C ZE

Current Account (GDP %)

(1.0)

(10.7)

0.3

(3.8)

TUR

Unemployment (%)

11.7

25.5

10.7

5.6

3.0

7.3

5.7

3.3

Credit Rating (S&P)

BBB

BB-

BB

BB+

Stable

Negative

Negative

Stable

54,3%

POL

46,2%

36,0%

33,3%

ROM

MAC

BUL

Outlook

60,6%

SER

CPI (%)

100%

79,1%

HUN

27,9%

15,4%

___________________________ Source: EIU, BMI. 7

Bulgarian mobile market overview • Three-player market, with Globul as a strong #2 • Challenging business case for a new nationwide network

Dec. 2012 operating metrics Mobile subscriptions (million) % postpaid Market share (total subs) ARPU (EUR/month)

5.6

4.5

2.5

69%

62%

22%

44%

36%

20%

5.9

6.0

n.a.

469

378

439

2012 Financial metrics (EURm) Revenue

(1)

(1)

EBITDA

207

135

179

% EBITDA margin

44%

36%

41%

% Operating cash flow margin (2)

30%

24%

17%

__________________________ Source: Company Filings, TheMobileWorld, WBIS. 1. Consolidated (fixed and mobile). 2. EBITDA less capex. 8

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Regulatory landscape Gobul’s spectrum holdings



Regulation driven by EU directives



MTRs already among the lowest in the EU following cuts in 2012-2013



Mobile number portability in effect since 2007



New 1800 MHz spectrum awarded to potential new entrants in December 2011 – however no launches yet

• • •

900 MHz: 2x11.2 MHz (Jan 2021) 1800 MHz: 2x10 MHz (Jan 2021) 2100 MHz: 2x10 MHz (April 2025)

MTR development (EUR cent) 25

National rate International rate

20 15 10 5 0 2009

2010

2011

2012

2013

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Globul: Financial profile ● Healthy EBITDA margin, with further upside potential

Globul financials (1) EBITDA margin (EURm)

● Operating cash flow margin below Telenor’s regional subsidiaries

450

● Opportunity to leverage Telenor’s operational excellence in CEE

150

40%

422

38%

413

378

300 168

158

2011 Revenue

2012 EBITDA margins in Bulgaria

40 %

36 %

41 %

44 %

40 %

31 %

34 %

34 %

24 %

20 %

20 %

10 %

10 % 0% (2) Globul Vivacom ___________________________ Source: Company Filings, Broker Research. 1. Globul financials only, excluding Germanos. 2. Consolidated (fixed and mobile). 3. Excluding telecommunications taxes

2012 EBITDA

2012 OCF margin vs. Telenor CEE subsidiaries

30 %

30 %

135

0 2010

50 %

36%

0% Mtel

Globul

Telenor Serbia

Telenor Hungary (3)

Telenor Montenegro

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Telenor’s strategy for Globul ● Utilise Telenor’s expertise to revamp service offering and price plans ● Network swap and other network upgrades ● Utilise know-how and joint CEE initiatives ● Take advantage of the mobile data opportunity

Telenor will leverage expertise from Serbia •



Strong track record of execution in Serbia •

Revenue market share growth despite entrance of 3rd operator



Market leadership in postpaid and B2B



Operational excellence by leveraging best practices



Market-leading cost metrics and profitability

Telenor Serbia revenue market share 38%

40%

42%

42%

2009

2010

2011

2012

Telenor Serbia opex/sales

Clear opportunity to replicate successful strategy in the Bulgarian market

34% 28%

2009

2010

25%

25%

2011

2012

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Summary ● Acquiring Globul, a strong #2 mobile operator in Bulgaria ● Leveraging on Telenor scale and core strengths in the CEE region ● Consistent with value-driven and disciplined M&A strategy

Appendix

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Globul: Financial profile Globul financials (1) 2010

2011

2012

Revenue % growth

422

413 (2.1%)

378 (8.5%)

EBITDA % Margin

168 39.8%

158 38.3%

135 35.7%

Capex % of revenue

78 18.5%

62 15.0%

46 12.2%

Operating cash flow % of revenue

90 21.3%

96 23.2%

89 23.5%

EURm

___________________________ Source: Company Filings. 1. Globul financials only, excluding Germanos. 15

Globul: History Sep 2001

Aug 2005

Sep 2006

• Globul awarded

• Globul acquired

• Globul launches

2nd mobile licence

2001

by Cosmote from OTE



Nov 2005

• Vivacom (Vivatel) entered as #3 MNO

2006

Apr 2013

• Acquisition by

3G services

2007

2008

Apr 2007

• Cosmote acquires Germanos

Telenor announced

2009



2012

2013

Oct 2012

• Sale process launched by OTE

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